In this week’s The Seven…

• The results are in: Jobs down in July
• A weak pulse: Canada’s GDP
• Sticker shock: Grocery prices
• Interesting Fact: U.S. imports of Canadian oil
• Chart of the Week: Too much of a bad thing: The inflation hangover

“Sometimes I wonder

What I'm a-gonna do

But there ain't no cure

For the summertime blues”

Eddie Cochran, “Summertime Blues”

When it comes to the economy, Eddie Cochran is wrong in that there are cures for the summertime blues—starting with a more reasonable approach to international trade by the United States. But with that tonic not available at the moment, a wobbly labour market, falling exports, and tepid GDP growth are casting a pall. This morning’s job numbers, which we dig into below, won’t improve the mood. And, as our Chart of the Week shows, the hangover from the long fight against inflation has not gone away.

On a more positive note, the exemption of CUSMA-compliant goods is providing a partial shield against U.S. tariffs, the Alberta economy is in a better position to ward off the worst effects of the trade war, and there is still a good chunk of summer left to put the economic blues aside and have a little fun before the leaves start turning (sorry, but that’s the forecast!).

Anemic numbers: Jobs in July

After a surprisingly good June that saw the country add 83,100 jobs (+0.4%), employment in Canada fell by 40,800 in July (-0.2%). Monthly job growth has been flat or negative in five of the last seven months with employment up by only 27,000 positions compared to the start of the year (+0.1%).

Despite the loss of jobs, the national unemployment rate held steady at 6.9% due to a drop in the participation rate.* The number of full-time jobs fell by 51,000 versus an increase in part-time positions of 10,000.

Canadians aged 15-24 bore the brunt of the job losses with employment in this age cohort down by 31,000 (-1.2%).

The July numbers and the weak performance of the Canadian labour market so far this year will help tilt the Bank of Canada toward providing some economic stimulus via cuts to its trendsetting policy interest rate. The Bank’s next interest rate announcement is set for September 17. Our call remains two more 25-basis point cuts by the Bank before the end of the year.

Alberta also lost jobs in July. Employment in the province fell by 16,800 (-0.6%) after an increase of 30,000 (+1.2%) in June. As was the case nationally, the pullback in July was due to fewer full-time positions (-38,400) while part-time employment increased (+21,600). Unlike in Canada as a whole, Alberta’s labour force increased alongside the job losses so its unemployment rate went from 6.8% in June to 7.8% in July—the highest it has been since October 2021.

*The participation rate is the labour force (those working and actively looking for work) expressed as a percentage of the total population aged 15 years and over.

Alberta is doing a little better than Canada in terms of job creation so far this year, but with employment only 0.3% higher in July than in January, its performance has also been rather weak. Today’s jobs report, albeit grim, remains mostly in line with our latest forecast as we expect the unemployment rate to average 7.3% this year before easing somewhat to 7.1% in 2026.

Not as bad as it could be: Canada’s GDP

My foot recently started to hurt. A Google search convinced me I was on death’s door, so I went to the doctor and learned I have plantar fasciitis. I’m stuck with a really sore foot (which is no joke), but it’s not life-threatening, so my outlook has actually improved. This is kind of where we are with the Canadian economy in 2025. Earlier this year, the threat of U.S. tariffs got us wondering about a deep recession. That scenario has not come to pass (and if we can secure a decent “deal” with the U.S., it likely won’t). Whew! But, like my sore foot (it’s more like a broken leg and arm for the businesses and workers dealing with sector-specific tariffs), we are stuck with significant economic pain evinced by very low levels of economic growth.

According to Statistics Canada’s latest GDP by industry report, the national economy shrank in three out of the first five months of the year. Our current forecast is for Canada’s economy to grow by just 1% for the year as whole—better than a recession, but very weak nonetheless. Where things actually land will, of course, depend on how the trade war evolves. If the exemption for CUSMA goods is not maintained or the U.S. economy falters more than expected (which is bad news for Canada), we are likely to dip into recession territory.

Ouch! Price inflation at the grocery store

Every now and then when I was a kid, my mom would make pancakes for dinner. I thought it was a treat, but I later realized it was because there was not much else to work with until payday. With food bank usage in Canada rising to a record-high of over two million visits a month last year, the unemployment rate averaging almost a point-and-a-half higher than in 2023, and the lingering effects of red-hot inflation (see the Chart of the Week section below), many families are finding it hard to keep food on the table.

In Alberta, the average cost of food purchased from stores is 26% higher than five years ago before the inflation rate took off. What’s more, of 105 typical grocery store items tracked by Statistics Canada in its series on retail prices,* only six were cheaper in June 2025 than in June 2021 versus 22 items that were between 40% and 67% higher). This makes it especially difficult to outmaneuver inflation by buying different items.

*This series is not as exhaustive as the items in the food purchased from stores inflation data and includes some non-food products.

Chart of the Week: Inflation after the fact

Inflation is a tricky concept because the inflation rate can (and often does) go down without actual prices doing the same. For example, the national monthly inflation rate (measured as the percentage change in the price of a fixed basket of consumer goods and services compared to 12 months earlier) has fallen from a peak of 8.1% in June 2022 to 1.9% in June 2025. The actual price of the basket of goods and services, however, went up over the same period by 7.5%. If you compare prices today to June 2021 before inflation was running rampant, they are 16% higher.

For the price of the basket to go down, the inflation rate would have to be negative (deflation) and that has only happened twice in the last 10 years (in April and May 2020 at the front end of the pandemic).

Consumer price growth is a normal part of our economy and only becomes an overarching problem* when it rises above the upper end of the Bank of Canada’s target range of 1% to 3%. Given this, the return of the national inflation rate to the target range is excellent news. But, because the monthly inflation rate was above 3% for almost three years, the cumulative growth in prices was unusually high and gave the economy a nasty hangover that many households are still feeling. We can see evidence of this in our Chart of the Week. The gap between where price levels are and where they would have been if inflation had stayed under control is what we feel when we are out shopping. A smaller gap would mean more money on hand for other spending and/or saving.

*Even an inflation rate within the target range can be a problem if your household’s income is not growing at a similar or better rate.

Answer to the previous trivia question: Karl Freiherr von Drais invented the meat grinder sometime in the 1840s. He’s also known as the “father of the bicycle” for inventing a two-wheeled contraption called a Laufmaschine.

Today’s trivia question: The month of August is named after the Roman Emperor Augustus. What were the years of his reign?